Developments in Family Provision on Death

Professor Gareth Miller reviews the impact of recent decisions on family provision on death

Gareth Miller, Emeritus Professor, Norwich Law School

IntroductionA claimant under the Inheritance (Provision for Family and Dependants ) Act 1975 must first show that the court has jurisdiction to hear the application and that he or she is eligible to apply under one or more of the paragraphs of s.1(1). If these requirements are satisfied the Court will then have to determine whether reasonable financial provision has been made for the claimant and, if not, what provision should be made and in what form. The Court will also have to determine the property out of which provision may be ordered. This article will consider recent cases on the first and last of those questions.

JurisdictionA court has jurisdiction to hear an application under the 1975 Act only if the deceased died domiciled in England and Wales. However, there is no requirement that an applicant should be so domiciled or indeed resident in order to make an application. A person who comes within one of the categories set out in s.1(1) of the Act can apply for provision even though resident abroad. In Witkowska v Kaminski (1) Blackburne J had to consider whether the claimant was eligible to make a claim under the Act despite the fact that for most of the time that she had lived in England with the deceased she was an illegal "overstayer" in this country contrary to the Immigration Act 1971, or at any rate on the expiry of her successive six-month visas. For the defendant it was argued that the claimant ought not to be heard to rely on her illegal presence here to establish her claim. This was rejected by Blackburne J. who said that whether during the two years immediately preceding his death the deceased and the claimant lived as husband and wife in the same household was a pure question of fact. It was not dependent on whether the claimant was an illegal "overstayer". He said: (2)

"…just as the wife's unlawful presence in this country was no bar to her ability in Mark v Mark(3) to establish habitual residence and domicile in this country so as to ground jurisdiction in the court under section 5(2) of the Domicile and Matrimonial Proceedings Act 1973, so also was the claimant's unlawful presence in this country no bar to her ability to invoke the court's jurisdiction under the Act to make reasonable provision for her out of the deceased's estate."

Applications by surviving spouses and former spousesApplication can be made by a spouse of the deceased and by a former spouse of the deceased but not one who has formed a subsequent marriage or civil partnership (4). It is now well known that the standard of provision for a surviving spouse is not limited to maintenance, but the setting of that standard has proved problematic. This was considered fully in a recent article for Family Law Week by Penelope Reed (see this link) and will not be discussed further here. Provision for a former spouse is limited to maintenance.

Applications by parties to a civil partnership, cohabitants and dependantsAn application may now be made by a civil partner of the deceased and the standard of provision is the same as that for a surviving spouse and not, therefore, limited to maintenance (5). Application may also be made by a former civil partner of the deceased, but not one who has formed a subsequent marriage or civil partnership. In such cases the standard of provision is limited to maintenance as in the case of former spouses.

In the case of other relationships, there remain two possibilities. First, an application may be made under s.1(1)(e) on the basis of dependency. The technicalities and limitations involved in an application on this basis are by now well known. In particular a claimant must show that he or she was being maintained by the deceased immediately before the deceased's death. Secondly, since the relevant provisions of the Law Reform (Succession) Act 1995 came into force in relation to the estates of persons dying on or after January 1 1996, cohabitants may apply under s.1(1)(ba). In order to qualify under s.1(1)(ba) an applicant must show that during the whole of the period of two years ending immediately before the date when the deceased died, he or she was (a) living in the same household as the deceased, and (b) as the husband or wife of the deceased.

Three problems have arisen in practice in relation to these requirements of s.1(1)(ba).

(1) The parties must have been living in the same householdIn Churchill v Roach(6) Judge Norris QC sitting in the Chancery Division found that although the claimant and the deceased had undoubtedly been living together in the same household as husband and wife for the last 17 months or so of the deceased's life, during the preceding seven months of the requisite two year period, they had not been living together in the same household despite their close relationship. They had maintained two separate households. He did not regard it as fatal that two separate properties were involved as it was perfectly possible to have one household and two properties. However, in the circumstances of the case there were two separate establishments with two separate domestic economies. Although the claimant failed to bring herself within s.1(1)(ba) she did succeed in showing that she had been partly maintained by the deceased and so came within s.1(1)(e) as a dependant.

(2) They must have done so as husband and wifeThis requires a consideration of all aspects of the relationship between the claimant and the deceased. In Re Watson(7) Neuberger J said that

"It seems to me that, when considering this question, the court should ask itself whether, in the opinion of a reasonable person with normal perceptions, it could be said that the two people in question were living together as husband and wife: but, when considering that question, one should not ignore the multifarious nature of marital relationships."

In Fitzpatrick v Sterling Housing Association Ltd(8) Lord Hobhouse noted, it would seem with approval, that in Re Watson(9) , "Neuberger J used reasoning wholly inconsistent with extending the category beyond heterosexual relationships". However, account must now be taken of the decision of the House of Lords in Ghaidan v Mendoza(10) that the right of a "spouse" to succeed to a protected tenancy on the death of a protected tenant under the Rent Act 1977 applied to a homosexual partner of the tenant.

(3) They must have done so for the whole of the period of two years ending immediately before the date of the deceased's deathThe period of cohabitation must end "immediately before the date of the deceased's death", so that a period of two years or more will not be sufficient for qualification if the cohabitation has been terminated before death. However, the courts have been prepared to show the same degree of flexibility as in the case of an application by a dependant.(11) Thus in Re Watson the period was not terminated by the fact that the deceased had been in hospital for the last three weeks of his life. In Gully v Dix(12) it was accepted that the claimant and the deceased had lived together in the same household as husband and wife for many years, but the claimant had left the deceased in August 2001 after the deceased had threatened to kill her. The deceased had died some three months later. The Court of Appeal held that the judge had correctly applied the law in looking at "the settled situation" and not at the "abnormal situation in the last three months of Mr. Dix's life" when, because of Mr. Dix's abuse of alcohol, Mrs. Gully found herself unable "to cope with the consequences of living with him and moved out." Their living together for 27 years was "the norm of their relationship", and that was the settled situation. Ward LJ said:(13)

"Thus the claimant may still have been living with the deceased in the same household as the deceased at the moment of his death even if they had been living separately at that moment in time. The relevant word is 'household' not 'house', … Thus they will be in the same household if they are tied by their relationship. The tie of that relationship may be made manifest by various elements, not simply their living under the same roof, but the public and private acknowledgement of their mutual society, and the mutual protection and support that binds them together.…For present purposes it is sufficient to ask whether either has demonstrated a settled acceptance or recognition that the relationship is in truth at an end. If the circumstances show an irretrievable breakdown of their relationship, then they no longer live in the same household and the Act is not satisfied. If, however, the interruption is transitory, serving as a pause for reflection about the future of a relationship going through difficult times but still recognised to be subsisting, then they will be living in the same household and the claim will lie."

He considered that the judge had succinctly encapsulated this by asking whether the relationship was merely suspended. There was abundant evidence that so far as the claimant was concerned, the relationship was not at an end. (14)

The question was again discussed in Witkowska v Kaminski where the claimant and the deceased had begun to live together as husband and wife in July 1997. However, on 18 June 2002 she returned to Poland and remained there for the next fourteen weeks, only coming back to England having heard of the deceased's accident and, by ill-fortune, arriving back only on the day of his death. She had not therefore actually been living in the same household as the deceased for over three months prior to his death. The last cash payment he made to her, capable as qualifying as 'maintenance', was on 12 August 2002, six and a half weeks before the deceased's accident from which he died a few days later. The judge held that the claimant had established her right to claim under s.1(1)(e) on the basis of being maintained by the deceased and "if it were necessary" he was also satisfied that she was entitled to apply under s.1(1)(ba) on the basis of having lived in the same household as the deceased. Blackburne J held that since he was of the view that "the judge was entitled to conclude that the settled arrangement for [the deceased] to maintain the claimant continued up to his death" he did not need to come to the view on whether the judge was right to conclude that "cohabitation continued to subsist, despite the absence in Poland". However, he was "not persuaded that the judge's conclusion was wrong" and if it had been necessary he would have rejected the defendant's appeal on this ground too. (15)

Property in respect of which an order may be madeAn order for provision under the 1975 Act can only be made out of the net estate of the deceased. There is a group of sections in the 1975 Act whose object is to widen the scope of the net estate so as to prevent avoidance which was relatively easy under the previous legislation. Thus s.10 enables the court to reach property which was the subject of an inter vivos disposition by the deceased provided certain conditions are satisfied. Section 8 deals with property nominated by the deceased and property which was the subject of a donatio mortis causa. In practice most difficulty seems to have arisen in relation to s.9 which deals with jointly owned property.

Section 9 is concerned with the deceased's share in property held as beneficial joint tenant. It is not needed where property was held by beneficial tenants in common since the deceased's share will automatically form part of the net estate. Under s.9, where the deceased was, immediately before his death, beneficially entitled to a joint tenancy of any property, then on an application for provision under s.2 of the Act, the court may order that the deceased's severable share of that property, at its value immediately before his death, be treated as part of the net estate of the deceased to such extent as appears to the court to be just in all the circumstances of the case. Thus the court has a discretion as to the extent to which the deceased's severable share is to be treated as part of the net estate.(16)

Was the property jointly held? A preliminary question that may arise is whether the property is jointly held property for the purposes of s.9. In Murphy v Holland (17) Mr. and Mrs. Murphy had effected a policy of life insurance with the Royal Insurance. It was a fixed term policy to run for 25 years providing for the benefit to be paid to either on the death of the first of them or on the acceptance by the insurance company of a claim for terminal illness by one of them. There was no endowment element. Payment of the premiums continued after the parties had divorced and Mr. Murphy had lived with another lady who gave birth to the claimant shortly after the death of Mr. Murphy. The claimant applied on the basis that she was the child of Mr. Murphy within s.1(1)(c). The insurance policy was the sole potential asset to meet such a claim and it was accepted that the question turned on the construction of the policy. Thomas LJ said:(18)

" … although there was no evidence … in relation to the circumstances surrounding the policy, the plain inference to be drawn was that the death benefit was intended by the parties to be payable to the survivor of either Mr or Mrs Murphy; it was to be for the exclusive benefit of the survivor to enable the survivor to deal with the financial consequences of the death of one of them. That would be the ordinary inference to be drawn when a life insurance is effected for a fixed sum without profits, without a surrender value and without an endowment element; it was not a so called 'savings product', but pure life insurance. "

There was nothing to displace that ordinary inference or to suggest that it was ever intended that the estate of the deceased was intended to benefit. Although notices of severance are occasionally served in respect of life assurance contracts where there is a joint entitlement to the sum payable on an endowment, it was not conceivable that Mr. and Mrs Murphy contemplated anything other than that the death benefit would be payable to the survivor. This conclusion was not affected by the fact that the terminal illness benefit was acknowledged to be owed to them both jointly. Pill LJ agreed but Chadwick LJ dissented and would have upheld the decision of the trial judge that immediately before the death of Mr. Murphy the benefit of the policy was jointly held and the joint interest liable to be severed. The result was that s.9 did not apply and there was no property against which an order could be made.

What was the value of the severable share?If it is established that property was jointly owned by the deceased and another, it becomes necessary to determine the value of the deceased's severable share. It would appear on a literal reading of s.9 that the order is limited to "the value thereof immediately before his death". On the other hand s.3(5) of the Act provides that in considering the matters to which the court is required to have regard under s.3, the court must take into account the facts as known to the court at the date of the hearing. This would seem to include the value of the property at the date of the hearing. In Dingmar v Dingmar(19) the Court of Appeal had to consider the extent of the property that could be reached under s.9 where the property had increased substantially in value since the date of the deceased's death. Jacob and Ward LJJ (Lloyd LJ dissenting) held that the court did have power to make an order in relation to the deceased's half share at its present value.

It must, however, be emphasized that just because the deceased's severable share may be deemed to be part of the net estate at its value at the date of the hearing, it does not mean that the court will consider it appropriate to make an order affecting the whole of that value. Moreover, any application under s.9 must be brought within six months of the grant of representation to the estate and no extension is possible. This is intended to provide certainty for the surviving joint tenant at an early date, but Dingmar shows that this will not be the case as long as no grant is taken out. Where the home is the only asset of real value this may not occur for some time.

It is worth noting that in the earlier case Powell v Osbourne(20) the Court of Appeal had to deal with the situation where there was a life insurance policy maturing on the death of one joint owner, the proceeds of which discharged a mortgage on the jointly owned property. The Court of Appeal held that the object of the statutory phrase was to make available the value of the half-share in the property at the last moment when the deceased could have severed the joint tenancy. It could be argued that this meant the value of the half share subject to an appropriate share of any mortgage affecting the property. However, the Court of Appeal held that a half-share of the proceeds of a policy supporting the mortgage also formed part of the estate. The result was that the court's powers under s.9 extended in effect to the deceased's severable share free from the mortgage.(21)

ConclusionThe recent decisions have shown that the courts are prepared to be flexible in interpreting the provisions of the Act and applying the strict wording to practical situations